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Question from Kevin Mullally: The opinion letter from the JusticeDepartment in December 2011 created a major opportunity for thestates to establish their own policies for intrastate Internet gambling.Some states have already acted. Given these developments, what is therole of the federal government in determining gambling policy versusthe role of the states?Congressman Barton: The primary role of federal governmentis to regulate between the states and interstate commerce. The billI am sponsoring gives states primary authority to allow Internetgambling for poker purposes only. The bill is an opt-out bill and ifa state wishes to opt out, all it requires is a letter from the gover-nor stating that they don’t want to participate and then they areautomatically excluded. The federal government’s role is to makesure the rules are fair and the same for all citizens to play poker formoney on the Internet.

Congressman Heck: The role of Federal government is to setdown the framework to permit and regulate inter-state onlinegaming and in my mind that really is iPoker. I don’t believe inopening up the Internet to all forms of casino type gambling.However, we need federal legislation for iPoker to make sure thatthere is not a patchwork of state regulations that runs across ournation. The role of the federal government is to make sure thatthere is a level playing field so the regulations are in sync acrossthe country to avoid a multitude of different regulatory require-ments which would actually hinder the ability to be successful.

THE FUTURE OF GAMING POLICY By Kevin Mullally

The future of gaming in the United States will to a

great extent be decided in Congress and state leg-

islative bodies over the next several years. Oppor-

tunities for brick and mortar gaming operations are

becoming fewer while the global economy continues its trend

towards online and mobile activities. Will the gaming industry in the

U.S. be allowed to go online? What role will lotteries play? What is

the future of the pari-mutuel industry? Will online policy be tethered

to the brick and mortar operators? These and many other policy

decisions will play a crucial role in determining the competitiveness of

the U.S. gaming industry in the increasingly competitive global

marketplace. I was fortunate to have the opportunity to sit with lead-

ing Congressional and State Legislative leaders to discuss these

issues. The first part of this series explores the role of the federal

government versus the states in regulating Internet gambling as well

as the issues relating to the consideration of legal gaming in Texas.

The next segment will explore other public policy issues that affect

gaming markets.

The participants include: Congressman Joe Barton (R-TX);

Congressman Joe Heck (R-NV); Representative Bill Davis (R-IN);

Senator John Carona (R-TX); Speaker Mark Ferrandino (D-CO); and

Senator Bill Galvano (R-FL).

CASINO LAWYER • AUTUMN 2013 27

Kevin Mullally: What is the perspective of state legislators on therole for the federal government versus the role of the states?Senator Carona: This is better left to individual states to address.From a Texas policy perspective, Internet gaming isn’t as appeal-ing since it won’t create significant jobs or other forms of economic development.

Speaker Ferrandino: We have definitely seen Internet issues andonline issues being regulated more at the federal level. More recently there’s been some allowance of flexibility to the states toset their own policies for online gaming, especially poker. I knowthere has been interest in Colorado to try to move that way. Ithink the federal government needs to create a framework to makesure that there are some basic protections and rules to determineif a state line is crossed but also to give the states the flexibility totry to craft what works best for them.

Rep. Davis: I think that the federal government is better left to issues dealing with airwaves and bandwidths and for those kindsof things that impact people on a national basis. They just need tolet the states regulate gaming within the states whether it is land-based gaming, or online gaming or any other kind of gaming.

Senator Galvano: The federal government has had moreresponsibility in Internet gaming because it is interstate and actually a lot of it is international. So I do think the federal government should take the lead but maintain discretion amongthe states to participate or not.

Kevin Mullally: One of the concerns about Internet poker in smallerpopulation states is a lack of liquidity. How would the states addressthis issue and what are your feelings about the use of interstate com-pacts to increase liquidity?Speaker Ferrandino: I think the demographics and economics ofColorado will provide enough demand for adequate liquidity. Themarket size might limit the number of providers. I think a way toensure that there is optimal liquidity is for states to band togetherthrough inter-state compacts and share in the regulatory costs andthe revenue structure. A good start would be to look at compactsby region. If our neighbors are interested, we would work to-gether to figure out how to get it done.

Congressman Heck: If the Congress is not going to support afederal framework, then I think it is incumbent upon them to atleast ensure there are no federal obstacles or hindrances to thosestates that freely want to enter into inter-state compacts. In fact,we are beginning to look at whether or not there are any federalregulations or laws that would hinder or prohibit states from en-tering into an inter-state compact for Internet gaming. While ithas been very difficult to get an iGaming or iPoker bill throughCongress, we can at least make sure the federal government is nothindering states who want to offer this. This is something weshould be able to do.

Congressman Joe Barton (R-TX) Congressman Joe Heck (R-NV)

Senator John Carona (R-TX) Speaker Mark Ferrandino (D-CO) Senator Bill Galvano (R-FL)

Continued on next page

Representative Bill Davis (R-IN)

Kevin Mullally: How much time do you have before the states have done so much on an intra-state level that the federal legislation becomes really difficult?Congressman Barton: Well I think the sooner the better. Thestates are beginning to act. Some of them have already acted,and I think over next two to three years many states are going tohave some sort of Internet legislation. Three or four already do,so the sooner we act at the federal level to have an umbrella billthat sets the playing field for inter-state gaming, the more honestgames will be, and poker will be on the Internet. I had reallythought that we had a good chance to pass a bill in the last Con-gress and it did not happen. I’m hopeful that we can do it in thisCongress in the next year and half. I would like to get a fewmore Senators to sign onto the bill. I don’t have them yet and ofcourse in the House the issue is the House leadership is not realanxious to act unilaterally, without seeing some real support fromthe Senate. So we are in kind of a “who goes first” situation. Thelandscape is changing as numerous states act, and I think thatwill create an incentive and at some point an imperative for theCongress to pass the bill and the President to sign it.

Congressman Heck: Kevin, I think that is a great question.Time is of the essence in my opinion because as you clearlypoint out as more and more states go down the path of build-ing legislation on their own it is going to become more andmore difficult to then overlay a federal regulatory scheme. Andso the premiere gaming state of Nevada is already on its own.New Jersey is not far behind and Delaware is close. Pennsylva-nia is considering it. The more states act, the more difficult itbecomes at the federal level.

Kevin Mullally: Texas is one of the few states left that has no com-mercial gaming, despite being surrounded by states with commercialcasinos on all sides. What are the policy considerations that have ledto this and do you expect any changes in the foreseeable future?Senator Carona: Texans spend over $4 billion a year in thoseneighboring states with casinos. We are missing out on billions ineconomic development dollars and tens of thousands of jobs. Wehave been out-smarted by Oklahoma and Louisiana. Despite pollstelling us that huge majorities of Texans want to keep theirmoney in state and to vote on expanded gaming at the ballot box,the legislature has lacked the will to address the problem whileour horse industry collapses from an unfair playing field.

Kevin Mullally: What are the most important political considera-tions that affect the creation of gaming policy in Texas?Senator Carona: Vast majorities – including Republican primary voters – support voting on expanded gaming in Texas.We need to continue to communicate to voters about the eco-nomic benefits – billions of dollars and tens of thousands ofjobs. We have to make sure the horse industry benefits and thestate gets its share in taxes. We also need to ensure that wedon’t put gambling in places where it isn’t wanted – it’s easy tocreate a process of local approval options to address that. We have to limit the total number to keep them competitivewithout over-saturating the market. �

Kevin P. Mullally is the General Counsel and Senior Director of Government Relations forGaming Laboratories International, LLC, theworld’s leading independent testing laboratory.Mr. Mullally is GLI’s chief legal officer and isresponsible for all risk management policies for the company as well as supervision of all outsideattorneys and consultants. In addition, he servesinternationally as GLI’s primary liaison to elected

and appointed officials at the state and federal level. Prior to joining GLI, Mr. Mullally was the Executive Director of the Missouri Gaming Commission.Previously, he served as General Counsel and Chief of Staff to Missouri StateSenator Harry Wiggins.

Continued from previous page

The role of Federal government is to set down the framework to permit andregulate inter-state onlinegaming and in my mind that

really is iPoker. I don’t believe in opening up the Internet to all

forms of casino type gambling. —Congressman Heck

The federal government hashad more responsibility in Internet gaming because it isinterstate and actually a lot ofit is international. So I do think

the federal government shouldtake the lead but maintain

discretion among the states to participate or not.—Senator Galvano

28 CASINO LAWYER • AUTUMN 2013

I had really thought that we had agood chance to pass a bill in thelast Congress and it did nothappen. I’m hopeful that we cando it in this Congress in the next

year and half.—Congressman Barton